blogging on issues relevant to a B-school business law course

A Reputation Tarnished by Corruption

Posted by Linnea Endersby

We are often told that one mistake can set fire to an entire reputation. This has been the case for the Nissan Chairman Carlos Ghosn. Up until recently, Ghosn was known for having a very successful career, but the uncovering of his corruption has permanently tainted all of his previous successes. Ghosn began his career working for Renault, a French automotive company, in 1996. When he first started with the company, the company was experiencing some financial difficulties. However, in approximately only year Ghosn was able to make the company profitable once again. Three years later, when Renault purchased a 36.8% stake in Nissan and Ghosn took over as the CEO of both companies, he was able to help dramatically reduce Nissan’s debt. It could be argued that the peak of his career came when Renault and Nissan combined with Mitsubishi and the three became the largest automotive group in 2017. All of these victories aside, what most people hear about Ghosn now is that he was recently arrested.

Carlos Ghosn, along with his associate Greg Kelly, were arrested by the Tokyo District Prosecutors Office when it was discovered that they were not reporting Ghosn’s full compensation. The two were responsible for underreporting $44.6 million. The compensation was not fully recorded in the Tokyo Stock Exchange, and so many other members of the company were not aware of how much Ghosn was actually gaining. After an intern al investigation Nissan found other incidences of misconduct, such as the use of company assets for personal use. In a statement to the press the current CEO of Nissan, said that he believes that this kind of corruption comes in part from placing too much power in the hands of one person. Nissan has officially released a statement saying that Ghosn will be removed from his positions within the company. After these findings, Ghosn’s reputation will be irreversibly damaged because of his financial misconduct.

The law acts as a guideline for how to do business. By stepping outside the law Ghosn not only tarnished his personal reputation, but also the company’s. Now the company is associated with scandal. It appears to me that Ghosn and Kelly committed all of these crimes simply because of greed. They were not satisfied with the amount of money they were making, and so they took it into their own hands to find ways to make more. As a business student this case only emphasizes the connection between ethics and business practices. Every decision that is made for a business should be made with the ethical impacts in mind. At the very least, even if the business is not overly concerned with being ethical it needs to be sure to remain within the law. Without these steps, the successes of a businessperson become irrelevant.